News release: “The BIS Quarterly Review for December 2010, released today, discusses how the focus of market participants has shifted to renewed worries about sovereign risk in the euro area from the global impact of further monetary policy easing in the United States. The December issue also provides highlights from the latest BIS data on international banking and financial activity. In addition, it features four articles on FX and OTC derivatives drawing on the Triennial Central Bank Survey released at the beginning of December (more detailed abstracts follow):

1. Turnover in FX markets has risen to $4 trillion since the 2007 survey. Growth owed largely to the increased trading activity by high-frequency traders, banks trading through the biggest dealers, and online trading by retail investors.
2. Turnover of derivatives in emerging markets has grown more rapidly than in developed countries. FX derivatives are the most commonly traded instruments.
3. The volume of outstanding credit default swaps has nearly halved since the end of 2007, as market participants have intensified efforts to reduce counterparty risk.
4. A user’s guide to the Triennial Central Bank Survey of foreign exchange market activity highlights key dimensions of this dataset and methodological issues that are important to interpret it correctly .”
5. Related postings on financial system